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Victoria’s Secret is about to be sold after years of scandal and slumping sales

February 20, 2020, 11:34 AM UTC

L Brands Inc. is close to selling a controlling stake in its Victoria’s Secret brand to private equity firm Sycamore Partners in a deal that values the lingerie brand at $1.1 billion, Wall Street Journal reported citing unidentified people familiar with the development.

Sycamore Partners is expected to buy 55% in Victoria’s Secret in a transaction that with L Brands and retain 45% in a separate firm that will include the young-adult focused Pink chain, according to the newspaper. L Brands’ billionaire founder Leslie Wexner will step down as chairman and chief executive officer, WSJ said. The deal could be announced as early as Thursday.

Wexner, 82, and the longest-serving chief executive officer on the S&P 500 Index, may remain on the board of L Brands and retain stake in both the companies.

The transaction follows years of scandal and slumping sales at the lingerie chain. The Columbus, Ohio-based firm has struggled to mend an image tarnished by allegations of misogynistic culture under Ed Razek, its controversial former chief marketing officer, as well as lingering questions about Wexner’s relationship with late convicted sex offender Jeffrey Epstein. Wexner says Epstein defrauded him.

Lost Ground

Victoria’s Secret, still tied to the push-up bra aesthetic the company projected for many years, has lost ground to competitors that market their products as comfortable and body-positive. A broader retail shift to e-commerce and away from shopping malls has also dealt a blow.

After this sale, L Brands would be reduced to running the Bath & Body Works chain of skin care products that contributed 35% to the overall revenues in the year ended February 2019. Victoria’s Secret, despite a declining contribution over the years, brought in nearly 56% of L Brands’ revenue last year, according to data compiled by Bloomberg.

The deal follows L Brands’ plans, laid out last September, for a turnaround at Victoria’s Secret. At the time, executives said they would improve the in-store experience and update the marketing to be more inclusive while making sure core customers don’t feel alienated.

L Brands shares have climbed almost 36% this year in New York after declining for four straight years. The company is scheduled to report quarterly results on Feb. 26.

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